Sector brief: Travel & Leisure
China's dashing new trains
February 8, 2010: A new rail link that is causing problems for China Southern Airlines could indicate the kind of competition that many Chinese carriers will face in the future.
The new high-speed Guangzhou-Wuhan service, which opened in December, cuts the 660-mile (1,070km) journey from 11 hours to three.
China Southern, which has China's biggest fleet, responded at first by adding flights, slashing prices and speeding up check-ins, but many customers nonetheless switched to the train. And now the airline is reportedly considering scaling back its new flights and selling bundled air and train tickets.
As The Economist recently reported, China plans to extend its rail network by almost 19,000 miles by 2015. Eight thousand miles of this will be the high-speed tracks that pose the most potent threat to airlines.
Even the chairman of China Southern has been fulsome in his praise. "High-speed rail has three advantages over air travel," Si Xianmin is reported to have said with refreshing frankness. "It is more convenient, more punctual and has a better safety record. This could help erode the airlines' market shares."
These are non-smoking trains and The Economist points out that this seems to be taken most seriously.
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